Job Loss Far Below Expectations

The government reported Friday that the U.S. job market declined for the fourth month in a row, with nonfarm payrolls down 20,000 in April.

The decline was smaller than the 75,000 drop in nonfarm payrolls that economists were forecasting on Wall Street, putting the stock market on track for an early rally amid renewed hopes that the economic slowdown will be short-lived.

Nonfarm payrolls figures were revised down to a decline of 81,000 in March and 83,000 in February.

Adding to the market's early optimism, the unemployment rate declined to 5% in April from 5.1%.

Cramer: Jobs Figures Say Buy Stocks

Combined with Wednesday's GDP report, which showed the U.S. economy continuing to eke out growth in the first quarter at a pace of 0.6%, the employment report fueled speculation that the Federal Reserve will keep its federal funds rate target steady at 2% in the months ahead.

Average hourly earnings increased a penny, or 0.1%, to $17.88. Continued sluggishness in wage growth is viewed positively on Wall Street, since a spike in wage growth would suggest that higher energy, food and commodity prices, along with the weak dollar, are translating into higher labor costs and causing an inflationary spiral.

This bolsters the Fed's forecast that slow economic growth will keep inflation in check, justifying its aggressive actions aimed at adding liquidity to the financial system to ease the pain of the credit crisis and housing slowdown. The central bank has now lowered its federal funds rate by 325 basis points since the outbreak of the credit crisis last summer.